The tax-exempt market opened on a quiet note Tuesday morning as traders slowly got back to work following a three-day weekend.
Bond markets were closed Monday for Columbus Day and trading was quiet to start the week, a Chicago trader said. "D.C. is taking a bigger toll than people think," he said. "No one is willing to put capital at risk." With the government shutdown extending into its third week and the debt ceiling approaching Oct. 17, traders were cautious.
Still, a few issuers are expected to come to market later Tuesday in the primary. Citi is expected to price for retail $360 million of triple-A rated Battery Park City Authority senior revenue bonds in a tax-exempt and taxable series. Institutional pricing is expected Wednesday.
RBC Capital Markets is expected to price for retail more than $200 million of Pennsylvania Turnpike Commission bonds. The deal includes $105 million of subordinate revenue bonds, rated A3 by Moody's Investors Service and A-minus by Standard & Poor's and Fitch Ratings, and $100 million of motor license fund-enhanced turnpike subordinate special revenue bonds, rated A1 by Moody's and AA by Fitch. Institutional pricing is expected Wednesday.
This week's deals in a holiday-shortened week come as volume is expected to increase. Nearly $4.2 billion is expected to come to market, up from last week's revised $3.51 billion. In negotiated deals, $3.54 billion should be issued, up from last week's revised $2.79 billion. On the competitive calendar, $655.8 million is expected to be auctioned, down from last week's revised $721.2 million.
On Friday, yields on the triple-A Municipal Market Data scale ended unchanged. The 10-year and 30-year yields were flat for the second session at 2.60% and 4.18%, respectively. The two-year was steady at 0.35%.
Yields on the Municipal Market Advisors benchmark scale also ended mostly flat across the curve. The 10-year yield rose one basis point to 2.75%. The 30-year yield was steady at 4.33% for the second session and the two-year was unchanged at 0.55% for the fourth session.
Treasuries were slightly weaker Tuesday morning. The benchmark 10-year yield increased three basis points to 2.71% and the 30-year yield rose two basis points to 3.76%. The two-year was steady at 0.35%.